5 Ideas for Maxing Out Your Retirement Savings

If one of your New Year’s resolutions was to save more money, you have a golden opportunity to do it by stashing more cash into your retirement plan at work. Anyone with a 401(k), 403(b), most 457 plans, or a federal government Thrift Savings Plan can put away $17,500 in tax-free retirement contributions in 2014.

For those of you who are 50+ and feeling like you haven’t saved enough, Uncle Sam is helping you to play “catch up.” You’re allowed to sock away an additional $5,500 in your 401(k) and retirement savings plans in 2014.

So in total, people age 50 and above can set aside $23,000 worth of 401(k) contributions in 2014, while those under 50 can allocate $17,500 to their workplace retirement plans. While this sounds good, most of us know that saving money isn’t particularly easy—especially when you have a lot of day-to-day or monthly bills staring you in the face.

To meet your goals, however, consider using the following five ideas to help you save more money and max out your retirement savings in 2014.

Idea #1: Up your game—and your contribution—gradually

Let’s assume that it would be a struggle (or maybe even totally impossible) for you to immediately start contributing the maximum to your retirement plan. That’s fine. But just because you can’t max out your retirement savings today doesn’t mean you won’t be able to do it in three months, maybe six months from now, or perhaps by year’s end.

To get there, just take baby steps and approach the savings process gradually.

Simply set a goal and strategically boost your retirement contributions over time. For example, if you’re currently putting 5% of your salary into a 401(k) or 403(b) plan, make it 6% or 7% in the beginning of 2014, and then consider upping your contributions again in the late spring or early summer.

If you’re not putting away any money right now, just get started. March into your human resources department at work and fill out the paperwork to start contributing to your retirement plan. It really isn’t that hard, and procrastinating is only setting you back.

Plus, chances are you won’t even miss the money out of your paycheck—especially since it’s deducted automatically each pay period.

Idea #2: Adjust your tax withholdings

But what about those of you who think that putting aside money actually would crimp your budget, and you would feel that “missing” money from your paycheck?

Here’s an idea: “add” money back into your salary by adjusting your withholdings at work. About three out of four Americans get a tax refund check each year after filing their taxes. And those refunds run nearly $3,000.

If you’re one of those folks getting a refund, you’re giving the government an interest free loan, and you’re letting the feds take too much money out of your check each pay period.

Instead of waiting around for a big tax refund check each year, get that money—about $250 a month for those with a $3,000 refund—added back into your pay. That way, it will push up your income, and you won’t “miss” the money deducted when you make higher retirement savings contributions.

Idea #3: Sell something

If increasing your retirement contributions would be a hardship, you’ll need to have some other source of cash to make it easier. Another way to come up with cash—if you feel you need it—is to sell something you no longer want, need or use.

By getting rid of things like electronics, household furniture, clothing, and other goods, you can raise some extra money and put it to the side. Then go ahead and up your retirement contributions to a level that’s comfortable. And only use the cash you raised if and when times are very lean and you really need the money.

Idea #4: Make a short-term sacrifice

Nobody ever said saving money was going to be a cakewalk. So if you really want to help secure your financial future, some level of sacrifice is going to be necessary.

What are you willing to give up and sacrifice today so that you can have a better tomorrow? It may be shopping trips, travel, clothing, eating out, your weekly movie night, a music download habit—or something else altogether. Only you know what categories of spending are eating up your hard-earned dollars.

So just make a commitment to give up that extra spending—at least for a little while—so you’ll be more financially able to save for retirement. Delayed gratification is a skill that’s learned over time. But the more you do it, the larger the payoff. Also, the more you do it, the less it seems like “hard work,” because you start to see the bigger picture: that a short-term sacrifice now will definitely bring you years—if not decades—of financial peace of mind later.

Idea #5: Use your raise

A final option to increase your 401(k) funds is to use any raise you receive in 2014 and put that extra money into your 401(k).

Look at it like this: if your employer boosts your salary by 2%, you can then increase your retirement contributions by an equal percentage—or at least by the dollar amount of your raise.

Whatever you do, make a commitment to saving more money for the future.

By the time your working days come to a close, all the cash you’ve set aside will help your retirement years to be more comfortable, financially stable and far less economically stressful.